For this reason the diet and fitness industry makes billions of dollars each year with nutrition and exercise programs designed to help people lose weight. Global Trends

From a global perspective the world is becoming much smaller. Globalization has become possible because of the advent of the internet and the ability of the internet to connect people regardless of borders. The internet has also changed the manner in which companies throughout the world function by creating applications that allow for 24-hour financial transactions. This has forever changed the manner in which business is conducted.

Another global trend, particularly is microloans, particularly in third world countries. Microloans are given to individuals to start or expand a business. These loans are usually given to sole proprietors and can make all the difference between living in poverty and being able to provide an education for their children. These types of loans have grown in popularity because they assist people who cannot get loans in conventional ways. In addition they are successful because they have high rates of payback which permits others to also take out loans.

Industry Analysis

The concept of social networking sites first came to the attention of the public with the development of sixdegrees.com in 1997. This particular sites allowed users to connect to friends, family and associates based on various degrees of separation. It provided users with a place to send messages to one another. Ultimately this site was sold to Youth Stream Media Networks for $125 million. However the demise of dot com companies that came in 2000 led to the end of youth stream media.

Since this time both professional and recreational networks have become popular and been able to maintain a base of consumers who have remained with the companies despite an influx of new companies. In the early 2000 sites such as Friendster and Myspace emerged as social networking sites, particularly for young people. Since this time Facebook and now Twitter have grown substantially in popularity.

The social networking industry, continued growth is expected for the foreseeable future. According to Swartz, 2008 "Facebook, MySpace and other social-networking sites have been the rage of the tech industry for more than a year. Following investments by Microsoft and News Corp., the companies are valued in the billions of dollars and are considered blueprints for how to build a website. It is a parlor game that has Silicon Valley buzzing. With online ad spending booming into a nearly $50 billion market this year, there is plenty of money to be had. Big-name advertisers are drooling over millions of young, affluent consumers who are spending more time on their online profiles than in front of TV and movie screens. They are particularly smitten with the prospect of tailoring ads to people's specific interests (Swartz, 2008."

In addition amongst people in their teens and twenties, social networking is particularly popular. The Pew Center reports three quarters or 75% of people in this demographic have a profile on a social networking site such as Facebook. With these things understood the use of social networks are sure to continue well into the future and companies that operate in the industry will have the ability to realize a great deal of profits well into the future. In order to fully exploit the popularity of social networking companies have to have a keen understanding of the forces that propel the industry. The next section of this discussion will focus on Porters Five Forces.

Porters Five Forces

Buyer Power

In some ways the social network industry is different from other types of industries as it pertains to buyer's power. This difference exists because users don't have to purchase anything because the services provided in this industry are free. However users still have power because they have the ability to choose which websites that they will open account with. As such social networking sites must ensure that they offer the services and products that customers want. In addition companies within the social networking industry should attempt to develop products that are forward thinking and provide them with the opportunity to grow and expand.

In the case of Facebook buyers or users have a great deal of power because they can choose not the use the site or choose an alternative site. Facebook is not the only site that allows users to communicate with one another and share media. With these things understood buyers have a significant amount of power.

Supplier Power

This difference exists because unlike traditional companies that sell products, Facebook offers a service. Granted the company utilizes servers and must have a certain amount of bandwidth to ensure that the site functions in the manner that it is intended to function but these issues are not as significant because the companies that allow the use of their servers and bandwidth do not have much power as there is competition that exist amongst the suppliers.
To some extent there is a great deal of vertical integration as it pertains to the development of programs and application for use on Facebook. Facebook does not have to outsource programmers and there is no shortage of people who have the ability to program the applications used on Facebook. With these things understood the suppliers have very little power.

Rivalry

Amongst the various social networking sites the presence of rivalry exists. Many of the social networking sites have identical feature such as allowing users to post pictures and videos. In addition there are sites that appear to be alike but have different application. For instance twitter is a social networking site that has features that are similar to those of Facebook as it pertains to the ability to have subscribers, friends and the ability to post pictures and video. In addition there are newer sites such as blogtv that allow people to interact with one another via video in real time. Some users will be more attracted to twitter because of the instantaneous nature of the site.

"Twitter is also looking to expand its presence across the Web with its @anywhere service, which will allow people to log in to Twitter from other Web sites," the New York Times article continues. "The moves by Facebook and its rivals set up a battle for control over social interactions across the Internet....So far, Google's answer to these battle cries has been the creation of Google Buzz, a partnership with fading social media star MySpace, not to mention a pre-emptive rollout of its own real-time search platform. But that's been getting decidedly mixed results. In fact, the whole idea of "search advertising" is questionable, according to some online marketing experts...Search advertising clearly made Google the powerhouse it is today, with $23.7 billion in annual revenues last year," but a big question is how well it will work for real-time search, which is Twitter's bread and butter (Internet Social Media Rivalries Heating Up, 2010")."

Obviously there is a great deal of rivalry in the arena of social networking as companies jockey to gain a share of the market. The impact of these newer sites such as Google buzz remains to be seen. However it is evident that the social networking industry can be viewed as a promising business endeavour and as such many companies that have specialized in other types of business such as Google are beginning to expand into the social networking arena.

Barriers to Entry

At the current time the barriers to entry are dependent upon the skill sets of those attempting to enter into the industry. Many of the most successful social networking sites were started with very little capital. Once these sites were able to generate traffic they were able to attract advertising dollars and realize a profit. Although there are many social networking sites that currently exists the barriers to entry are so low and the changes in technology occur so rapidly that new sites are constantly being developed.

Threat of Substitutes

The threat of substitutes is always a concern for this industry, because people are constantly developing ideas and technology changes so rapidly. The development of new ideas has led to the phenomenon that is twitter. The presence of substitutes is also a major issue for any company in this industry because most sites are absolutely free to users. Users do not have to subscribe to use the content and in some cases such as twitter, users can even be paid for tweeting. With this understood the threat of substitutes is substantial. However, some users will opt to stay with social networking sites that they are the most familiar with and that their friends are also connected to. In this respect some social networking sites have loyal customers that will not leave the site.

Strategy Formulation

Facebook began as an electronic form of face books that have been on college campuses for many years. In fact, when Facebook first began only college students were allowed to become members of the…